What to watch: Fear, not greed, is good

Fear is good. So says Dan Veru, chief investment officer at Palisade Capital Management.

If you're wondering how in the world the stock market rebounded Friday from what looked like the brink of disaster earlier in the week, a lot of it has to do with the fact that investors got so darn scared that the stock market got back to doing what it does best, which is climb the proverbial wall of worry.

"Ebola. Hong Kong. ISIS. Crazy (Vladimir) Putin. An unpopular president at home. (Add up all those negatives) and people ask: How could you be possibly be buying stocks?" says Veru. "That is the psyche of most investors. But it's when things are perfect and the Dow (Jones industrial average) is at 30,000, that's when it will be time to get out of stocks and the market."

Veru was using the Dow 30,000 loosely, more for illustration purposes than a market call. But his point is well-taken: The time to worry is when not a single soul on Wall Street sees any risks in the stock market, not the other way around.

He notes that the stock market headed into the week way oversold, with small company stocks flashing signs of under-performance vs. large company stocks not seen in years. The market was ripe for a reversal and rebound, he says.

There are market positives that are being overlooked amid the angst. Both the U.S. economy and job market, for example, are getting stronger. "And expectations are much lower than they were a few weeks ago," adds Veru.